Health-care insurance: It’s expensive, no matter who pays for it

Homer city workers complaining about proposed increases of health-insurance premiums won’t find much sympathy among small businesses and employees also looking at increasing health insurance costs. In a survey of health insurance premiums for private-sector workers, some employees pay almost 10 times the monthly premium compared to city workers.

Consider the rate of $2,300 a month a family of four would pay for the catastrophic health insurance offered by Ulmer’s, a Homer general merchandise store with 35 full-time employees. A family of four paid $170 under the 2013 city of Homer insurance and will pay $277 under a proposed plan in the 2014 budget.

“I never could offer that kind of package,” said Scott Ulmer, owner of Ulmer’s, about the city health insurance. “I think every small business in town could say the same thing.”

City council member Beau Burgess, who owns several small businesses, agreed. “What they (city workers) had before is light years beyond what I could consider the private standard to be,” he said.

At Ulmer’s, a single employee pays $182.50 a month. Ulmer’s subsidizes 75 percent of the $730 total cost for that employee. Additional coverage for spouses and children isn’t subsidized, however.

The Homer News looked at plans offered by South Peninsula Hospital, The Center, Ulmer’s and on the Affordable Care Act federal insurance exchange. Homer plans also were compared with other Kenai Peninsula public employee plans, the health insurance Burgess pays for himself, and the plan for Homer News employees.

The 2014 city plan is comparable to those offered by South Peninsula Hospital and The Center, and in some ways still better when looking at factors like deductibles and out-of-pocket maximums.

The Center employees pay $75 a month for one person, hospital employees pay $115 for one person and city of Homer workers pay $92 a month, though with different deductibles. Homer News employees pay $148 for one person.

Analyzing insurance plans can be complicated because not only do premiums vary, but so do other factors. Generally, the value of a plan can be looked at in these ways:

• The monthly cost of premiums;

• The overall coverage of the plan, including the cost difference between in-network or preferred health-care providers to out-of-network providers;

• The percentage a patient pays for things like routine office visits or a flat co-pay;

• The annual deductible; and

• The maximum out-of-pocket cost per individual and family.

Some plans also include coverage for dental and eye care.

The varieties of coverage are generally described as bronze, silver, gold and platinum or “Cadillac” plans. Burgess said plans also can be ranked from 1 to 100 — the higher the number, the better the plan. He ranked the 2013 Homer plan as a 93 and called it a “Rolls Royce” plan.

Monthly premiums vary depending on how many people in a family are covered and how much of the health-insurance premiums the employer chooses to subsidize for additional family members.

Some employers subsidize premiums for spouses and children. At South Peninsula Hospital, for example, the hospital generally covers 90 percent of the true premium cost, said chief executive officer Robert Letson. Health insurance is provided as part of a union contract the hospital signed with the Teamsters, he said.

What plans cover also varies.

Under the Affordable Care Act, insurance plans offered through federal or state exchanges have to offer benefits for doctor visits, prescription drugs, hospitalization, maternity and newborn care, and preventive care. Plans offered in 2013 didn’t have to meet those standards, but in 2014 employer-provided plans will have to meet the same standard as plans offered on insurance exchanges.

Provisions like that have created uncertainty among private employers providing health insurance. Ulmer said he just got a letter from his insurer that the plan Ulmer’s has offered for 30 years will be canceled effective May 31.

“Thank you, Mr. Obama,” he said. “You took away what we were at least able to scrape together.”

Burgess has a plan he got six years ago that’s grandfathered in at a low price. He pays $500 a month for himself for a basic $2,000 deductible, with a $14,000 maximum for out-of-pocket payment and a 20-percent co-pay for a doctor’s visit. If he tried to get the same plan on the open market today, he’d pay $600 to $700 a month, he said — comparable to the Ulmer’s plan of $730 a month.

At that price, a silver plan offered by Moda Health in Alaska under the Affordable Care Act exchanges is a good deal at $364 a month for one person, with a $2,500 deductible and a $6,000 out-of-pocket maximum. Depending on income, some customers also can get federal subsidies.

For example, a family of four making $30,000 is at 127 percent of the poverty level and could receive a subsidy of $8,400 a year. A silver plan would be almost $9,000 a year or cost the family $600 with the subsidy. People wanting to price plans can visit the Affordable Care Act insurance marketplace at healthcare.gov. The website allows pricing without actually signing up for the plan. A calculator feature also shows if families are eligible for subsidies.

Burgess runs a bookkeeping business and has seen what small business clients now pay for health insurance. Generally, per employee it’s also about $700 a month under current plans. A family of four — two adults and two children — would be about $2,000 a month, Burgess said. That’s the total cost of health insurance, and what employees pay as a percentage of that cost depends on the employer.

Premiums have gone up about 8 to 15 percent a year, Burgess said. Two of his clients have dropped health insurance entirely, electing instead to pay into a Health Savings Account for employees to use to buy health insurance on their own.

Under the Affordable Care Act, employers with more than 50 full-time employees will be obligated to provide insurance. That provision was to take effect in 2014, but President Obama delayed implementation of that for a year.

“It’s my way to try to maintain some stability in a person’s life,” Ulmer said of why he provides insurance for his employees.

Burgess did make a blue-sky proposal that would address health-insurance woes not only of city workers, but city residents. He ran the numbers on what it would cost to provide public, single-payer health insurance with a $500 deductible to every full-time resident eligible for an Alaska Permanent Fund Dividend between age 18 and 65. A 2.5-percent sales tax would pay for that.

“If any group of significantly dedicated citizens want to bring forth universal health care as a right, I will sponsor the hell out of that,” he said.

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This is an excellent article, full of facts and personal testimonies including the entire community of public, private, city workers, small business owner, and employees of small business. Conclusion. Healthcare Insurance is too expensive no matter which segment of society any family or individual belongs to. The ACA is not a solution for any segment of society. The ACA has resulted in cancellations and increased costs for those who once were able to afford insurance before mandates made insurance unaffordable. Entire segments of the middle class have been priced out of the healthcare insurance market and will choose to self/insure and pay the penalties saving $20,000 a year in premiums. $20,000 a year they never had in the first place.